Advanced Chemical Industries (ACI), one of the largest business conglomerates in Bangladesh, sprang back to profit between July and September after recording losses for seven quarters straight.
The company, whose concerns range from fast-moving consumer goods to pharmaceuticals, farm machinery to fertilisers, automobiles to home appliances, supermarket to animal health products, logged in profit of Tk 9.7 crore for the first quarter of its 2020-21 financial year on the back of improved efficiency in operations and increased sales.
A year earlier, it posted losses of Tk 29.9 crore.
During the quarter, the company, which manufactures the Savlon brand antiseptic and disinfectant products in Bangladesh, logged in sales of Tk 682 crore, up about 23 per cent year-on-year.
“The significant rise in profit was due to higher sales volume after the countrywide shutdown was lifted,” said Pradip Kar Chowdhury, the chief financial officer of ACI, adding that the single-digit interest rate on bank loans also helped.
Although the company did not give a breakdown of its sales, it can be assumed that its Savlon-branded products contributed a fair share given the heightened hygiene practice for the global coronavirus pandemic.
ACI’s competitor in the hygiene product market, Reckitt Benckiser, the maker of Dettol and Lysol disinfectants, saw its sales soar about 23 per cent year-on-year to Tk 145 crore during the quarter.
In Bangladesh, the first confirmed cases of coronavirus were announced on March 8 and three weeks later, the government put the country on a general shutdown, bringing almost all forms of economic activities to a screeching halt.
The shutdown was lifted on May 30, leaving the majority of the businesses essentially with a missed quarter of sales.
This meant, the losses of ACI, whose financial year runs from July to June, widened from Tk 74.2 crore to Tk 105.9 crore in its 2019-20 financial year.
Still, the board of directors of ACI yesterday recommended 80 per cent cash and 10 per cent stock dividend for the financial year ended on June 30.
Shares of ACI, which was listed in 1976, closed 3.4 per cent higher at Tk 262.8 yesterday after hitting a high of Tk 268.8.
Analysts and stockbrokers said requesting anonymity that ACI's supermarket chain ‘Shwapno’ has been a loss-making concern since its inception in 2018, dragging down its parent company’s financial performance.
For instance, in the 2017-18 financial year, Shwapno incurred a loss of Tk 135 crore.
ACI officials though blame the losses on its high debt servicing obligations.
However, ACI’s current financial year's first-quarter result did not paint a resoundingly rosy picture: its cash flow has gone further in the negative territory.
The company said its cash flow during the quarter was Tk 1,73.1 crore in the negative in contrast to Tk 416 crore in the negative due to “high consumption of working capital for inventory build-up to cater to further demand”.